EIM42730 - Disallowance of director's remuneration for corporation tax purposes: consequential adjustment of employment income

Part 5 Chapter 2 IT(TOIA) 2005 (Sections 74(a) and 75 ICTA 1988)

In certain circumstances HMRC will seek the disallowance of some director바카라 사이트™s remuneration in arriving at a company바카라 사이트™s profits for corporation tax purposes. These are cases in which the director바카라 사이트™s remuneration does not meet the conditions of Part 5 Chapter2 IT(TOIA) 2005 (Section 74(a) ICTA 1988) (see BIM47105 and CTM08400).

In such a case, where both sides agree a disallowance of part of the director바카라 사이트™s remuneration there can be an adjustment of the employment income of the director. For there to be any adjustment to the amount of money earnings the director must (both of the following):

  • formally waive remuneration equal to the amount disallowed for corporation tax purposes
  • repay that amount to the company.

Where these conditions are met the director바카라 사이트™s employment income is reduced by the amount that has been disallowed for corporation tax purposes.

Note: this only applies where HMRC initiates negotiations of a disallowance of director바카라 사이트™s remuneration in the corporation tax computation. It does not apply where a director or company merely wants to waive remuneration after it has been treated as received for employment income purposes.